This reminds me a lot of when the department of education sold my student loans to a couple private firms. Out of the blue, I just received a couple emails from a couple companies I've never heard of asking me to give them all my information (including my SSN) in order to create an account. I deleted them immediately, assuming there was a new phishing scheme in vogue, and didn't realize what had happened until I checked my accounts a few months later and realized they had been paid off, with no information about who did the paying off. I couldn't even find one of the emails afterward to figure out who actually owned the debt, and had to call someone at DOE loan servicing to figure it out. I was flabbergasted.
Yep, just had to re-set-up all my direct deposit stuff. To summarize, the owner of my debt was allowed to sell it to a third party, with non-existent or at least extremely poor notification, in a way that required extra effort on my part to avoid accidental default! Not a great system in my opinion, but perhaps being at the mercy of those you have borrowed from is a disincentive to borrowing that is quite properly built into the system.
No one "paid" the loan, the debt was sold to a private creditor and OP's account was then considered settled in the eyes of the DOE. They can't delete the account in order to keep an audit trail, so the amount owed is adjusted to zero.
Sorry, wasn't clear. When the private lender bought the debt, it showed up in my original account as a payment in full. But of course it had just been transferred elsewhere.
